There’s a Global Power Problem in Connectivity

Why energy scarcity is shaping the future of data centres and interconnectivity

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We’re in the midst of a power crisis, a challenge that’s particularly pressing for rapidly expanding data centres, and it’s only getting worse. As AI, cloud computing, and social media platforms continue to expand, the demand for energy to keep these systems running is growing at a staggering rate. New data centres are being planned and built faster than ever, and they require more power than anything that came before. Yet the world’s power grids are already struggling to keep up.

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The scale of the issue shouldn’t be underestimated, nor should it be the subject of hyperbole. Key digital markets such as Virginia, London, and Frankfurt are already running into power constraints. In Dublin, the Irish government was forced to put new data centre developments on hold because they were consuming too much of the city’s electricity. It’s a similar story in Amsterdam, where authorities paused new developments in 2019 due to concerns about energy availability. 

Recent outages across Europe only emphasise the fragility of digital ecosystems. Internet connectivity was significantly impacted, with reports indicating a substantial drop in traffic and disruptions to mobile and internet services. Data centres in the affected regions were driven to rely on backup power systems to maintain operations, serving as a stark reminder that even well-developed regions aren’t immune to the risks of an overburdened power system.

While some of these restrictions have been eased, the ongoing problem is clear: power is running low in the key hubs that support global connectivity. In 2022, global data centre electricity consumption reached 460 terawatt-hours, with predictions that demand could double by 2026. 

Existing data centres are expanding their capacity to address the issue, but many simply can’t keep up. This current trend leads to new, less developed data centres, which require providers to further stretch their networks to keep up with costs and customer power demand. It presents a problem for robust carriers – their infrastructure is slowly weakening. 

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The AI Boom

Artificial intelligence is making the problem more acute. Training large language models (LLMs) demands immense computing power, and once those models are deployed, they need even more energy to operate. A single AI model, like OpenAI’s GPT-4, can take megawatts to run – enough to supply thousands of homes. Meta, Microsoft, and Google are all investing heavily in AI infrastructure, which will inevitably increase power consumption in the coming years. AI-related workloads are contributing significantly to data centre power demand, while industry reports suggest that AI data centres can require up to 50% more power than traditional cloud facilities.

Cloud computing also contributes significantly. The shift towards cloud-based applications means businesses are offloading their storage and processing needs to data centres rather than keeping things on-prem. Even small businesses are now contributing to the surge in power demand. Meanwhile, video-rich social media platforms are generating and storing more content than ever – and video processing remains among the most energy-intensive digital tasks.

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Emerging Markets and the Role of Offshoring

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To meet the growing demand for energy, solutions are being explored, but significant challenges remain as operators begin to look at renewable energy sources to meet their needs. However, renewables aren’t always available when and where there’s demand, and generating power from wind and solar is still notoriously unreliable and often requires traditional backup sources. Battery storage can help, but it’s not yet advanced enough to handle the massive power  demand in major data hubs. 

Leading companies like Microsoft and Google are experimenting with alternative solutions, including nuclear power and hydrogen fuel cells, but these technologies aren’t fully ready for widespread deployment. The dilemma between the need for sustainability and the demand for growth is becoming increasingly clear.

Secondary markets are becoming increasingly important within this dynamic. The biggest data centre hubs are struggling with power availability, so operators are looking at new locations that offer better energy access. Lisbon is a prime example. Over the last five to ten years, it’s grown from a minor player to a significant data centre market, partly due to its access to renewable energy and partly thanks to undersea cables connecting it to key global networks. Other markets, like Madrid and Oslo, are seeing similar growth, resulting in increased investment in connectivity, including new subsea cables and terrestrial fibre routes being built to support them.

Offshoring is emerging as a strategy to alleviate power constraints. Singapore, one of Asia’s major digital hubs, faces a dual challenge: limited land availability and constrained power generation. With little room to expand and growing electricity demands, Singapore-based companies are looking across the border to Malaysia. Johor, just a short distance away, is becoming a key destination for data centre operators. By leveraging Malaysia’s larger land area and access to power generation, these offshore facilities can help Singapore maintain its position as a digital leader while managing its resource limitations. 

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Challenge of our time

The power problem isn’t just a concern for data centre operators – it has wide-reaching implications for global connectivity and the fabric of our interconnectivity. If major hubs can’t expand due to power limitations, costs will rise, cloud adoption will slow, and connectivity bottlenecks will emerge. Countries that can provide reliable, affordable electricity will have a major advantage in attracting investment from cloud providers and tech giants. Connectivity is now directly linked to energy availability.

Governments and regulators are beginning to act, some by pushing for stricter efficiency standards, forcing data centres to optimise power usage. Others are offering incentives for renewable energy adoption. Without major advances in energy storage or new sources of power generation, these measures will not be enough.

The global power problem is expanding, and the companies that innovate with new energy sources or shift to emerging markets will lead the next phase of digital infrastructure. The rest will be left behind. SG.GS has spent the last twenty years building relationships with connectivity partners in expanding Asia-Pacific markets, including Singapore, Jakarta, Kuala Lumpur and many more. Tackling the challenges of demand versus supply, coupled with strategic planning for the future of connectivity, requires in-depth knowledge of not only the technological landscape, but the cultural and regulatory environment across the APAC region. 

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The global power problem is undoubtedly redefining the connectivity landscape. In the rise of the data centre market, SG.GS is making the necessary advancements. We’re aligning infrastructure deployment with long-term energy planning, building a more resilient, accessible, and scalable digital ecosystem for the world’s evolving connectivity needs.

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